Plans for around 3,500 affordable housing lots at Waraba (formerly Caboolture West) have been scrapped by a major developer, citing rapidly escalating infrastructure and development costs.
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Developer AVJennings announced it will drop the plans for its project in Rocksberg, which were slated to accommodate around 7,000 residents. The figures make up roughly one-tenth of the anticipated 70,000-person population for Caboolture West over the next 40 years.
The company informed the Australian Securities Exchange last week that escalating infrastructure and development expenses could not be covered by expected increases in sales revenue from the project.
“In line with an enhanced focus on prudent capital management, and subsequent to other options being exhausted, management worked closely with the landowner and other key stakeholders recently to negotiate a restructure of the agreement to the satisfaction of all parties,” AVJennings stated.
“Unfortunately, agreement has not been able to be reached prior to the next Option payment date in May 2024, and as a result the Company has decided to terminate its Option. Whilst the decision to terminate the Option was a difficult one, the Board believes it is in the best interests of the Company and its shareholders.”
Whilst the Rocksberg development had not yet received the green light from local authorities nor had any home sales or deposits been accepted, AVJennings’ CEO Phil Kearns had just last week criticised the excessive fees and charges imposed by federal, state, and local governments that add around $200,000 to the cost of constructing a new home.
The company’s choice to abandon the project will also result in a $17.2 million write-off of capitalised development costs, whilst also reducing its inventory of available lots by 3,500 units.
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Housing advocacy groups quickly responded, decrying the decision and calling on all levels of government to urgently address escalating development costs putting affordable projects at risk. With the housing crisis continuing to worsen, the market failure at Rocksberg highlights the challenges in delivering new affordable housing.
Featured image: Caboolture West (Photo credit: AVJennings/Facebook)
Published 27-May-2024
